1.This Act may be cited as the
Advancing College Choice and Ethics to
Protect Taxpayers Act of 2012
.
2.Strengthening
the Higher Education Act of 1965 ban on incentive compensationSection 487(a) of the Higher Education Act
of 1965 (20 U.S.C. 1094(a)) is amended by striking paragraph (20) and inserting
the following:
(20)(A)The institution will not provide any
commission, bonus, or other incentive payment based directly or indirectly on
success in securing enrollments or financial aid to any persons or entities
engaged in any student recruiting or admission activities or in making
decisions regarding the award of student financial assistance, except that this
subparagraph shall not apply to the recruitment of foreign students residing in
foreign countries who are not eligible to receive Federal student
assistance.
(B)The Secretary shall not promulgate
regulations related to subparagraph (A) other than such regulations promulgated
in section 668.14(b)(22) of title 34, Code of Federal Regulations (as in effect
on July 1,
2011).
.
3.Prohibition of
Deceptive Practices and protection from high pressure salesSection 487(a) of the Higher Education Act
of 1965 (20 U.S.C. 1094(a)) is amended by adding at the end the
following:
(30)The institution
will not engage in deceptive practices, defined as a practice that—
(A)is likely to
mislead consumers acting reasonably under the circumstance; and
(B)is material, that
is, likely to affect consumers’ conduct or decisions with respect to the
product at issue.
(31)(A)If the institution has
a Student Default Risk Index for a year (calculated by the Department and
defined as the institution’s 3-year cohort default rate, as defined in section
435(m), for the most recent year available, multiplied by the percentage of
students borrowing at the institution for the most recent year available) of
0.1 or greater, the institution will, for such year—
(i)provide individuals accepted to
enroll at the institution with a waiting period of not less than 2 weeks to
consider and compare among postsecondary options, program costs at the
institution, and employment prospects upon completion of a program of
study;
(ii)ensure that the receipt of
financial aid, incentives, or other benefits is not made contingent on a
student confirming enrollment before the end of the student’s waiting period;
and
(iii)notify students accepted to
enroll at the institution of financial aid determinations not less than 1 week
before the enrollment confirmation deadline, provided that all requested
application forms are received on time.
(B)If an institution described in
subparagraph (A) fails to meet the requirements of this paragraph, the
institution shall be subject to a civil penalty in accordance with subsection
(c)(3)(B)(i)(I).
.
4.Guarding against
misrepresentationSection
487(c)(3) of the Higher Education Act of 1965 (20 U.S.C. 1094(c)(3)) is
amended—
(1)in subparagraph
(A), by inserting the space availability in a program for which a
student is considering enrollment, its admission requirements, the
transferability of credits, whether the program meets the necessary standards
to qualify students to sit for licensing examinations or obtain certification
required as a precondition for employment, the passage rates of students in
obtaining certification requirements, the passage rates of students who sit for
licensing examinations,
after its financial charges,
;
and
(2)by striking
subparagraph (B)(i) and inserting the following:
(B)(i)(I)Upon determination,
after reasonable notice and opportunity for a hearing, that an eligible
institution has failed to meet the requirements described under paragraph (31)
of subsection (a), if applicable to the eligible institution, or has engaged in
substantial misrepresentation of the nature of its educational program, its
financial charges, the space availability in a program for which a student is
considering enrollment, its admission requirements, the transferability of
credits, whether the program meets the necessary standards to qualify students
to sit for licensing examinations or obtain certification required as a
precondition for employment, the passage rates of students in obtaining
certification requirements, the passage rates of students who sit for licensing
examinations, or the employability of its graduates, the Secretary may impose a
civil penalty upon an eligible institution of not less than—
- (aa)in the case of a first violation, the
minimum amount of a civil penalty pursuant to clause (ii) or an amount equal to
$1,000,000 multiplied by the institution’s Student Default Risk Index described
in subsection (a)(31), whichever is larger;
- (bb)in the case of a second violation, the
minimum amount of a civil penalty pursuant to clause (ii) or an amount equal to
$2,000,000 multiplied by the institution’s Student Default Risk Index described
in subsection (a)(31), whichever is larger; and
- (cc)in the case of a third or subsequent
violation, the minimum amount of a civil penalty pursuant to clause (ii) or an
amount equal to $3,000,000 multiplied by the institution’s Student Default Risk
Index described in subsection (a)(31), whichever is larger.
(II)For the purpose of subclause (I),
any violation by a particular institution will accrue against all Office of
Postsecondary Education Identifications (OPE ID) for such institution and
within the period of participation for the institution, as defined in section
668.13(b) of title 34, Code of Federal Regulations.
(ii)Upon determination, after
reasonable notice and opportunity for a hearing, that an eligible institution
has violated or failed to carry out any other provision of this title, the
Secretary may impose a civil penalty upon such institution of not more than
$27,500 (subject to such adjustments for inflation as may be prescribed in
regulation) for each such violation or failure to carry out a provision of this
title.
(iii)Any civil penalty under this
subparagraph may be compromised by the Secretary. In determining the amount of
such penalty, or the amount agreed upon in compromise, the appropriateness of
the penalty to the size of the institution of higher education subject to the
determination, and the gravity of the violation, failure, or misrepresentation
shall be considered. The amount of such penalty or the amount agreed upon in
compromise may be deducted from any sums owing by the United States to the
institution
charged.
.
5.Standardized
disclosure sheetSection 485
of the Higher Education Act of 1965 (20 U.S.C. 1092) is amended by adding at
the end the following:
(n)Standardized
disclosure sheet
(1)
(A)Not later than 6 months after the date of enactment of
the Advancing College Choice and Ethics to
Protect Taxpayers Act of 2012, the Secretary shall develop, in
coordination with the Director of the Consumer Financial Protection Bureau, a
disclosure sheet template to disclose information, including the information
required under paragraph (3), in a format that is easily understandable by
students, families, institutions, and institution-affiliated
organizations.
(B)Calculate
averages, produce and make available disclosure sheets, and establish
requirements for distributionNot later than 6 months after the
date of enactment of the Advancing College Choice and Ethics to Protect
Taxpayers Act of 2012, the Secretary shall—
(i)calculate the
State and national averages for the information described in paragraph
(3);
(ii)produce complete
disclosure sheets for each eligible institution, including the information
described in paragraph (3) based on the latest information available;
(iii)make the
completed disclosure sheets described in clause (ii) available online to
institutions and the public; and
(iv)establish
requirements for institutional distribution of the disclosure sheets to each
enrolled student and student accepted to enroll, as required under paragraph
(2).
(C)Provision of
sheets and dataThe Secretary shall annually produce and make
available to institutions and the public disclosure sheets with institutional
data, and State, institutional category, and national averages.
(D)Consultation
and content and format of disclosure sheet
(i)In carrying out this subsection, the Secretary shall
consult with students, the families of such students, representatives of
eligible institutions participating in any program under this title (including
financial aid administrators, admission officers, and business officers),
representatives of institution-affiliated organizations, secondary school
guidance counselors, and consumer advocacy groups to—
(I)develop the
layout and design for the disclosure sheets described in this paragraph;
and
(II)consider the
merits of requiring additional information in institutional disclosure sheets,
as authorized under paragraph (3)(Q).
(ii)The Secretary shall carry out consumer testing of the
disclosure sheets, targeted to low-income students, first-generation students,
and students of color, and their families.
(2)
(A)Each eligible institution participating in any program
under this title shall disclose to each student enrolled and accepted to enroll
in the institution in a manner that allows for the student or the family of the
student to take such information into account before enrolling, regardless of
whether the information was requested or not, and through appropriate
publications, mailings, or electronic media, the information described in
paragraph (3).
(B)In carrying out the requirement of subparagraph
(A), an eligible institution shall use the disclosure sheet produced in
accordance with paragraph (1)(B)(ii).
(C)An institution that is required under section
487(a)(31) to provide a student accepted for enrollment with a waiting period
of not less than 2 weeks to consider postsecondary options, shall disclose to
the student the information described in paragraph (3) at or before the start
of such waiting period.
(3)Content of the
disclosure sheetsEach disclosure sheet produced in accordance
with paragraph (1)(B)(ii) shall include the following information based on the
latest information available, for the most recent year available:
(A)The category of
the institution as public, nonprofit, or for-profit, and the level of the
institution as less than 2-year, 2-year, or 4-year, as defined by the most
common degree or credential awarded by the institution.
(B)The information
described in subsection (a)(1)(E), and the average cost of attendance for
institutions at the same level as the institution in the State in which the
institution is located and for institutions at the same level as the
institution throughout the United States.
(C)The average net
price (as defined in section 132) of the institution, and the average net price
(as defined in section 132) for institutions at the same level as the
institution in the State in which the institution is located and for
institutions at the same level as the institution throughout the United
States.
(D)The average net
price (as defined in section 132) of the institution for students enrolled at
the institution who receive assistance under this title, for each of the
following family income categories:
(i)$0 to
$30,000.
(ii)$30,001 to
$48,000.
(iii)$48,001 to
$75,000.
(iv)$75,001 to
$110,000.
(v)$110,001 or
more.
(E)The percentage of
students receiving grant aid at the institution, and the average percentage of
students receiving grant aid for institutions at the same level as the
institution in the State in which the institution is located and for
institutions at the same level as the institution throughout the United
States.
(F)The web address
for the net price calculator of the institution.
(G)The cohort
default rate, as described in section 435(m), of the institution, and the
average cohort default rate for institutions at the same level as the
institution in the State in which the institution is located and for
institutions at the same level as the institution throughout the United
States.
(H)The percentage of
graduates who borrowed Federal student loans prior to graduating for the most
recent year available, and the average percentage of graduates who borrowed
Federal student loans prior to graduating for institutions at the same level as
the institution in the State in which the institution is located and for
institutions at the same level as the institution throughout the United
States.
(I)The average
Federal student loan debt of Federal student loan borrowers after graduating
from the institution in the most recent year available, and the average Federal
student loan debt of Federal student loan borrowers after graduating from
institutions at the same level as the institution in the State in which the
institution is located and for institutions at the same level as the
institution throughout the United States.
(J)For an
institution that determines that its mission includes providing substantial
preparation for students to enroll in another eligible institution, the
transfer-out rate for the most recent year available.
(K)For an
institution that does not determine that its mission includes providing
substantial preparation for students to enroll in another eligible institution,
the retention rate as described in subsection (a)(1)(U).
(L)The information
described in subsection (a)(1)(L), and the average completion or graduation
rate for institutions at the same level as the institution in the State in
which the institution is located and for institutions at the same level as the
institution throughout the United States.
(M)A statement
acknowledging the prohibition on incentive compensation under section
487(a)(20).
(N)A statement
informing the student of the institution’s obligation to provide a waiting
period of not less than 2 weeks between acceptance and enrollment, if
applicable, as described in section 487(a)(31)(A).
(O)Federal resources
available to students to enable the students to compare programs of study and
costs, such as the College Navigator System, including the web address for
College Navigator.
(P)Additional
relevant information as determined appropriate by the Secretary through the
process described in paragraph
(1)(D)(i)(II).
.
6.Elevating key
institutional disclosuresSection 485 of the Higher Education Act of
1965 (20 U.S.C. 1092), as amended by section 4, is further amended—
(1)in subsection
(a)(1)—
(A)by striking
The information required by this section
and inserting
Except as otherwise provided under subsection (o), the information
required by this section
;
(B)in the matter
preceding subparagraph (A), by inserting and prospective
students
after provide to all enrolled students
;
and
(C)by striking
subparagraph (J) and inserting the following:
(J)the names of the
associations, agencies, or governmental bodies that accredit, approve, license,
or certify the institution and its programs, and the procedures under which any
current or prospective student may obtain or review upon request a copy of the
documents describing the institution’s accreditation, approval, licensing,
certification, and the process for registering a complaint within any
accrediting or licensure body, and the web address of, or a link to, the
Department’s Accreditation in the United States online
resource;
;
and
(2)by adding at the
end the following:
(o)Required
Front-End information disclosureNotwithstanding subsection (a),
each eligible institution participating in any program under this title shall
directly disclose to each student accepted to enroll in a manner that allows
for the students or the families to take such information into account before
enrolling, regardless of whether the information was requested or not, the
following information:
(1)The information
described in subsection (a)(1)(D).
(2)A good-faith
estimate of the cost of attendance for the duration of the program of
instruction in which the student is considering enrolling, based on the latest
information available.
(3)A statement of
the requirements and procedures for officially withdrawing from the
institution, including policies and procedures for reimbursement, and a
statement outlining the period during which students may withdraw from the
institution without incurring expenses or loan debt, as described in section
485(a)(1)(F).
(4)A description of
the procedures by which a student may submit complaints regarding educational
institutions to applicable Federal and State agencies, including State
approving agencies and accrediting agencies or associations and such contact
information as may be necessary to submit such complaints.
(5)The information
described in subsection (a)(1)(G).
(6)The information
described in subsection (a)(1)(I).
(7)The information
described in subsection (a)(1)(J).
(8)The information
described in subsection (a)(1)(M).
(9)The information
described in subsection (a)(1)(R).
(10)Accurate
information about space availability in the program for which the student is
considering enrollment for the current term, a calendar of registration and
financial aid deadlines for the current term, and the frequency with which the
program begins in a calendar year.
(11)Any articulation
agreements the institution may have with any other educational
institutions.
(12)The policies
established by the institution regarding transfer of course credit, including
the following:
(A)Any established
criteria the institution uses regarding the transfer of course credit earned at
another institution.
(B)Any changes by
the institution in such policies and established criteria that first took
effect in the 1-year period preceding the date of such determination.
(13)To the degree
practicable to determine, the median amount of private student loans, Federal
student loans, and total student loans, held by students at the institution
upon completion of a program of education at the institution.
(14)A general
overview of Federal student aid programs, the implications of incurring student
loan debt (including from private sources), and the consequences of defaulting
on a loan, including adverse credit reports, delinquent debt collection
procedures under Federal law, and litigation.
(15)The percentage
of students who enroll in the first term of a program of education at the
institution who, on the date that is 1 year after the date of enrolling, are
not enrolled in any program of education at the institution and have not
completed a degree or certificate at the
institution.
.